By Christina Rogers and Mike Spector
Ford Motor Co. will forge ahead with shifting small-car
production to Mexico despite repeated criticism from
President-elect Donald Trump, who has warned that companies face
consequences for leaving the U.S.
Ford's plan to rehouse output of the Focus compact car from
Michigan to a new $1.6 million plant being built in Mexico, which
isn't expected to result in job losses, remains on track for 2018,
Chief Executive Mark Fields said in an interview on Friday.
"We have made the decision to move the Focus out, and we're
making that investment now," Mr. Fields said. "When you look at
moving the Focus out of our Michigan assembly plant, that's to make
room for new products -- zero jobs affected, zero jobs
impacted."
The Dearborn, Mich., auto maker is expected to replace the cars
headed to Mexico with more-profitable pickup trucks and
sport-utility vehicles to keep the Michigan plant humming amid
soaring demand for such vehicles. Unionized auto workers would keep
their jobs and potentially receive larger profit-sharing checks
should Ford's operating profits in North America increase.
Mr. Field's remarks came a day after Mr. Trump took credit for
United Technologies Corp.'s decision to keep open a Carrier Corp.
furnace factory in Indiana and prevent about 800 jobs from moving
to Mexico. In exchange, United Technologies, Carrier's parent, will
receive $7 million in tax breaks over the next decade.
"This isn't a Carrier situation," Mr. Fields said of Ford's
plan. He said Ford decided to produce the car in Mexico partly to
keep the vehicle's price in line with customer expectations. "In
our business, it's a long-lead investment," Mr. Fields said of the
Focus plan.
He added that Ford's U.S. investment commitments remain "as
strong as ever," pointing to the company's commitment to invest $9
billion in its U.S. plants over the next three years as part of a
new labor contract struck last year with the United Auto Workers
union. The investment would support or create 8,500 blue-collar
jobs at Ford's U.S. plants.
Vice President-elect Mike Pence, currently Indiana's governor,
helped broker the Carrier deal. Carrier still plans to move 600
jobs from the factory to Mexico, and United Technologies intends to
proceed with closing a separate plant in Huntington, Ind., moving
another 700 jobs across the southern U.S. border.
Mr. Trump has said companies going forward would no longer
"leave the U.S. anymore without consequences." He has threatened to
slap Ford and other manufacturers with a 35% tariff for importing
goods from countries with lower labor costs. The pledge resonated
with blue-collar workers, helping Mr. Trump win close election
battles in Wisconsin, Michigan and Pennsylvania, the three decisive
states that propelled him to the White House.
Mr. Fields said Ford would weigh future Trump administration
policies when pursuing business matters. "Clearly any kind of
tariff would impact the entire industry and not one specific
company," said Mr. Fields, who previously said such a move would
cause economic harm. "We share the same objective as Mr. Trump and
his new administration. We want a strong economy."
Separately, Mr. Fields said Mr. Trump had "an influence" on the
auto maker's decision not to move production of a Lincoln SUV from
Louisville, Ky., to Mexico. "We had been looking at it," Mr. Fields
said, adding that it "made sense" to keep the vehicle in Kentucky,
given Mr. Trump's positions on tax reform and infrastructure
spending.
Ford never intended to close the factory or cut jobs, but rather
ramp up production of another hot-selling SUV, rendering it a
largely symbolic move. Mr. Trump two weeks ago took credit on
Twitter for Ford's decision, but overstated the move, suggesting
Ford would no longer relocate the factory to Mexico.
Nevertheless, Ford's move to keep the low-volume Lincoln MKC
rolling off the lines of the Kentucky plant reflected a willingness
to extend an olive branch to Mr. Trump, who has taken a hard line
on trade agreements affecting U.S. workers.
Bill Ford, great-grandson of automotive pioneer Henry Ford, had
called Mr. Trump to tell him the company would reverse course on
the Lincoln SUV. The move handed Mr. Trump a political victory
after the New York real estate mogul hammered Ford during the
presidential campaign over the separate plan to relocate small-car
production to Mexico.
After the election, Mr. Fields wrote Mr. Trump a congratulatory
letter, another sign the company hopes to mend fences with the
president-elect.
Ford and other auto makers could get some relief from the
incoming Trump administration on stringent fuel-economy
standards.
Mr. Fields, however, criticized a proposal the Environmental
Protection Agency made on Wednesday to keep intact tougher
fuel-economy standards that call for auto makers to sell vehicles
averaging 54.5 miles a gallon in 2025. The proposal was part of a
midterm review of the standards that wasn't expected to be
completed until 2018.
The EPA, after a 30-day public comment period, could make a
final determination to leave the targets intact before Mr. Trump is
sworn in as president on Jan. 20.
"We are extremely disappointed that 11th-hour politics are
short-circuiting" the process that called for regulators to weigh
data and market conditions when deciding whether the mileage
targets should be relaxed, toughened or unchanged, Mr. Fields said
in the Journal interview.
Low gasoline prices are sending consumers flocking to pickup
trucks and SUVs that have lower fuel economy and pollute more than
smaller cars, making the targets difficult to meet, car makers
contend.
The EPA released a draft technical report earlier this year and
has defended its process as exhaustive. Regulators point to
gasoline-injection and other technologies allowing auto makers to
meet future fuel-economy targets, which are intended to cut
emissions to address climate change and dependence upon foreign
oil.
Still, car executives had agreed to the rules, codified in 2012,
knowing a review would occur years before the toughest standards
were enforced. "We all agreed at the halfway point to have a
midterm review," Mr. Fields said, adding the mileage standards were
"unprecedented."
Trump policy adviser John Mashburn in November said the incoming
administration would conduct a "comprehensive review" of the
mileage and emission regulations, and expressed the view the rules
were meant to deal with foreign-oil dependence as opposed to
climate change.
Auto executives hoping existing regulations would be relaxed now
face the prospect of needing to lobby for a broader overhaul or
rollback. "We'll work with a new administration on a way forward,"
Mr. Fields said, adding it isn't yet clear "what form or fashion"
that would take.
Write to Christina Rogers at christina.rogers@wsj.com and Mike
Spector at mike.spector@wsj.com
(END) Dow Jones Newswires
December 02, 2016 17:33 ET (22:33 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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